Octagon reviews Ithaca Athena releaseThe following suggests to me that Warren at Octagon is very optimistic about the potential of this company. Look for substantial upwards revisions of the stock before year end.
From Octagon:
Today’s announcement that Ithaca’s share of Athena’s production will
initially be 4,950 bd by the end of Q2/11 dramatically improves the
outlook for the Company.
Generally, the market begins to price stocks on the one-year cash flow outlook. Within a few
months, the impact of the 2011 mid-year production additions should be reflected in the stock
price, and by year-end the market could be keying on exit 2011 estimates.
Clearly, there is substantial value creation potential for investors in Ithaca. High-growth stocks
with a strong balance sheet frequently trade in excess of a 5x multiple of cash flow; based
on the exit projections for 2011, this implies a stock price of over $7.50.
We maintain our BUY recommendation with a target price of $3.00 for the short term.